As Narayen steps down, Adobe must confront its next big transition
Last week, Shantanu Narayen announced he was stepping down as Adobe CEO after 18 years, leaving behind a legacy of transformation. Perhaps his biggest achievement was moving Adobe’s popular Creative Suite from boxed software to a cloud subscription business.
"He did the impossible by saving and transforming an on-premise company into a real SaaS business. The book is yet to be written on the second transformation — to AI," Anshu Sharma, co-founder and CEO at security startup Skyflow, told FastForward.
Narayen also built the company’s customer experience and marketing business primarily through three major acquisitions: Omniture, Marketo and Magento. More recently, he attempted to push the company in a new direction with the proposed $20 billion acquisition of Figma in 2022, a deal ultimately abandoned after regulators expressed strong antitrust concerns over Adobe acquiring a fast-growing rival.
Brent Leary, principal analyst at CRM Essentials, was surprised to see Narayen walking away at such a pivotal time. "Many tech leaders are saying this is one of if not the most interesting, important, and exciting time to be in tech ever, which makes it somewhat surprising for him to step down at this moment," Leary told FastForward.
The company was early to machine learning, but has struggled to make a smooth transition to generative AI. What's more, its core business model is increasingly being challenged by tools that can generate images and design concepts instantly. As a result, it has seen its stock price tumble over the last year, falling 36% in that time.
It’s unclear if he is stepping down because he simply is ready to move on, or if there was pressure to bring in new blood and they let him walk away on his own terms. Ray Wang, founder and principal analyst at Constellation Research, thinks it might be a combination.
"Shantanu has done a great job as a steward for Adobe during the transition to digital and the shift to AI," he said. "The next transition will require an AI-first and AI-exponential mindset." What he means is a leader who completely embraces AI across the organization both internally from an operations perspective, and externally from a products perspective.
Regardless, whoever replaces him will not only have big shoes to fill, but will have to work creatively to find new business models as AI redefines the industry, just as Narayen did during his tenure.
